The USDA bureau cited "drought in several growing areas in
the Centre South, which has delayed the maturity of the sugarcane", and reduced
yield prospects.

According to the International Sugar Organization, the
region received 340mm of rain in the December-to-February period, "only half
the normal levels of over 620mm".

However, the USDA staff also flagged "below average
replanting of sugar cane", with area seen rising only 100,000 hectares year on
year.

A wet weather spell last year represented a setback, in offering
"problems during the herbicide spray period", while the further spread of
mechanised harvesting would further depress yields.

Mechanised harvesting, while encouraged by Brazilian labour
laws, is less efficient that manual cropping.

National prospects

Sugar output from the Centre South should fall by some 1m
tonnes to 33.55m tonnes, with the decline limited by some switch by mills
towards making sweetener rather than ethanol from cane.

The proportion of cane allocated to producing sugar is
expected to rise to 46.5%, up 1 point from last season, encouraged by a revival
in prices, with the balance used for ethanol.

Overall Brazilian cane production will reach 629,000 tonnes,
down 21,000 tonnes year on year, and sugar output hit 36.8m tonnes, down 1m
tonnes, with the performance in the North East expected roughly the same as
last season.